When I was a kid, I worked at a local 9-hole golf course. It wasn't fancy. We didn't even take reservations, but we were the cheapest course in town and, inevitably, there would be times when we'd be so busy our customers would have to wait. On a few occasions like this, frustrated patrons would come up to us and ask how to get to the other golf courses around town.
The owner was proud of his course, and he hated hearing this particular question. So whenever he heard someone ask how to get to one of his competitors, he would boom out, "YOU CAN'T GET THERE FROM HERE!"
Clearly this was a preposterous answer. We weren't even located on a cul-de-sac, and anyone could simply retrace their steps and take a different road to a new destination. But that was part of my boss' little joke. His thunderous line didn't always work, but it did confuse and startle some customers into reconsidering and staying put to wait it out.
I think about this gambit a lot, because I often hear pension advocates use the same "YOU CAN'T GET THERE FROM HERE!" refrain. They'll often deploy it in response to data showing that teacher pension plans provide a secure retirement to only a small fraction of incoming teachers, and that those same plans have accumulated more than $500 billion in unfunded liabilities. The latest example comes from a paper written by Tyler Bond and Dan Doonan and published by the National Institute of Retirement Security (NIRS). The paper is ostensibly about what happened when states like Alaska, Kentucky, Michigan and West Virginia closed their defined benefit pension plans, but the paper's argument essentially boils down to saying that state-run pension plans are in such bad shape that they need new members to bail them out, and we must continue with the status quo forever.
On finances, Bond and Doonan argue that closing a poorly funded pension plan does nothing to pay down existing unfunded liabilities. This is true, but it ignores how the pension plans accumulated those unfunded liabilities in the first place. As Max Marchitello wrote in a recent report looking specifically at the case of West Virginia, when the state closed its defined benefit pension plan, it did little to address the plan's existing unfunded liabilities. The state still had to pay down those debts, and it largely failed to do so. But rather than blaming the state for accumulating those debts in the first place, or for failing to pay them off in a timely fashion, Bond and Doonan try to pin the blame on the shift to a defined contribution plan. That's a clever rhetorical trick designed to distract us from the question of whether the state's pension plan was good for the state or the majority of its teachers. (It wasn't.)
Similarly, Bond and Doonan attempt to argue that Alaska has trouble recruiting and retaining teachers because of its shift away from a defined benefit pension plan. But the authors neglect to mention that Alaska has always had trouble recruiting and retaining teachers. When we looked at the data on teacher turnover rates in Alaska over time, there was no visible effect of the retirement plan change. Teacher turnover was high in Alaska when they offered teachers a defined benefit pension plan, and it remains high now that new teachers are enrolled in a defined contribution plan. This finding squares up with what we've seen in other states as well; teachers just aren't that responsive to changes in their retirement plans.
Just like my former boss, pension advocates are using the "YOU CAN'T GET THERE FROM HERE!" refrain to scare legislators from asking tough questions about their state's pension plans. While responsible policymakers should be mindful of the effects of any potential change, and they should protect the promises made to current teachers and retirees, legislators should not be deterred from designing better solutions for the future. Ideally those plans would provide all new teachers with a path to a secure retirement.